Credit Scores & Credit Monitoring What To Do About Bad Credit How Will Bankruptcy Affect Your Credit Score? By LaToya Irby LaToya Irby Facebook Twitter LaToya Irby is a credit expert who has been covering credit and debt management for The Balance for more than a dozen years. She's been quoted in USA Today, The Chicago Tribune, and the Associated Press, and her work has been cited in several books. learn about our editorial policies Updated on September 8, 2021 Reviewed by Thomas J. Brock Reviewed by Thomas J. Brock Thomas J. Brock is a CFA and CPA with more than 20 years of experience in various areas including investing, insurance portfolio management, finance and accounting, personal investment and financial planning advice, and development of educational materials about life insurance and annuities. learn about our financial review board Fact checked by Lakshna Mehta Photo: © Image Source / Digital Vision / Getty One of the biggest fears people have about filing bankruptcy is the impact to their credit scores. Will your credit score be trashed forever? How low will it go? Credit has become such a staple in our lives that living without good credit can be a huge inconvenience. People are so afraid of losing their good credit — their mediocre credit even — that they struggle with debt for months or years and still end up filing bankruptcy. Unfortunately, there’s not much good news about your credit score when it comes to bankruptcy, but that doesn't mean you should hold up on filing bankruptcy just to hold on to your credit score. Bankruptcy Impact to Credit Score It’s difficult — or better yet, impossible — to predict exactly how far your credit score will fall after you file bankruptcy. The impact to your credit score is largely based on where your credit stands now and what information is on your credit report. According to myFICO, a high credit score can expect a huge drop in their score, compared to someone with a "modest" score. Another factor to consider is the number of accounts included in the bankruptcy filing. FICO also presents a mock scenario to better understand the effect of negative actions on your credit score. Different actions (missed payments, opening new accounts) impact your score differently, depending on what your score is to begin with. If credit problems have already pulled your score into the 500-range, you have a little less of a credit score to protect. But, that’s just an example of what could happen to your credit score. Yours might not drop as much or it might drop more. You won’t know unless you actually file for bankruptcy. Are All Bankruptcies the Same? FICO’s example doesn’t differentiate between Chapter 7 and Chapter 13 bankruptcy, the two types of bankruptcy available for personal debts. Chapter 7 bankruptcy will be over quickest, with discharge happening a few months after you file (if you qualify). It takes years to complete a Chapter 13 bankruptcy since you’d be on a three- to five-year repayment plan. Alternatives to Bankruptcy While you might lean away from bankruptcy based on the potential impact to your credit score, keep in mind that it may be the best of all your available options. Debt repayment and relief options include: Paying on your own Entering a debt management plan through a credit counseling agency Consolidating Settling Filing bankruptcy Out of these, filing bankruptcy will likely hurt your credit score the most, but it may be the best option if you have limited resources for paying back your debt. The first three options may not affect your credit score at all, but these options may not be available depending on your income, expenses and status of your accounts. Revive Your Credit After Bankruptcy If you decide to file bankruptcy, know that your credit isn’t lost forever. Once you’re out of bankruptcy and your finances are back on track, you can focus on rebuilding your credit score. That involves building a positive payment history with new creditors or with any accounts that survived the bankruptcy. You might be surprised to see how soon after bankruptcy you begin receiving credit card offers again. Bankruptcy remains on your credit report for up to 10 years, but it impacts your credit less as time passes and as you add positive information to your credit report. It’s possible to get to an excellent credit status after bankruptcy, but you have to get through the process first. If, of course, that’s the best option. If you're struggling with your debt payments, it may be in your best interests to temporarily forgo your credit score to get your finances back on track. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. myFICO. "What Are the Different Types of Bankruptcy and How Is Each Considered by My FICO® Score?" myFICO. "How Credit Actions Impact FICO® Scores." Illinois State Bar Association. "Your Guide to Bankruptcy for Individuals." United States Courts. "Chapter 7 - Bankruptcy Basics." United States Courts. "Chapter 13 - Bankruptcy Basics."